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Monica Noether, May 27, 2008
Mergers can have both pro- and anticompetitive effects. They can allow firms to function more efficiently or to increase the quality and scope of their offerings, thereby benefiting consumers. Conversely, they may permit anticompetitive increases in price or reductions in quality that harm consumers. The optimal remedy preserves the benefits of the merger, while mitigating the harm. Unfortunately, it is not always possible to achieve both of these objectives completely and simultaneously. This is particularly the case post-consummation, when the merged entity may have made operational changes to affect benefits. As a result, in some situations, merger remedies must balance multiple objectives and may not represent the “first best” solution to any single objective. This clearly applies to the remedy that the Federal Trade Commission has ordered in the Matter of Evanston Northwestern Healthcare Corporation (ENH), which challenged a merger between Evanston and Glenbrook Hospitals and Highland Park Hospital more than four years after the transaction was completed. Subscribers can download the entire article available in the column on the left.
